We’ve been talking about contracts for integrated project delivery since before the start of the Lesser Depression, since before Ben Bernanke was chair of the Federal Reserve; about when the Boston Red Sox won their last World Series. Yet, we’ve not come very far in implementing its promises. How come?
The initial hype promised nothing less than a revolution in efficiency and cost savings. For example, the AIA’s “Integrated Project Delivery: A Guide”(2007) tantalizingly proclaims: “The United Kingdom’s Office of Government Commerce (UKOGC) estimated that savings of up to 30% in the cost of construction can be achieved where integrated teams promoted continuous improvement over a series of construction projects. UKOGC further estimates that single projects employing integrated supply teams can achieve savings of 2-10% in the cost of construction.” This echoed an Economist article from 2000, also cited by the guide, which claimed that there is 30% waste in the US construction industry. If we can achieve such savings by adopting integrated project delivery, why isn’t everyone doing it?
Fact is, we’re not. Autodesk adopted IPD for construction of its new architecture, engineering and construction headquarters in Waltham, Massachusetts in 2008-2009. It was an exception. IPD is such a radical concept today, noted Phil Bernstein, Autodesk’s vice president of building industry strategy & relations, that Autodesk’s AEC HQ project was one of only about 10-15 “100-percent pure-play” IPD projects undertaken in the United States as of that time. Things have not changed. At the annual meeting of the ABA Forum on Construction Law in 2011, Howard Ashcraft, one of the foremost authorities on integrated project delivery in the United States, acknowledged that since then institutional owners have pulled back from IPD, insurance brokers are not hearing about it, and the industry, as a whole, is not much in the mood for innovation at this time. He noted that developers of heavy civil projects have concluded that IPD is not suitable for that industry segment.
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Tags: APD, Construction Costs, IPD
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A recent trial court interpretation of boiler plate Dispute Resolution Board (“DRB”) provisions in a public agency’s contract provided a big surprise to the Owner. The Court ruled that a DRB Recommendation finding merit to several Contractor claims was binding on the Owner despite the fact that Read more »
Tags: Claims Tip, DRB Update
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Introduction
Termination for “convenience” provisions are standard clauses in construction contracts seen in both the public and private works settings, generally allowing one party to terminate a contract even in the absence of the other party’s fault or breach, and without suffering the usual financial consequences of a breach. At least one dictionary defines convenience as “suitable or agreeable to the needs or purpose.” Read more »
Tags: contract termination
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Introduction
A surety that has issued a performance bond for a construction contract may become liable under the bond when the principal fails to fully and correctly perform the underlying contract between the principal and the obligee/owner (“owner”). Typically, a surety’s obligations under a performance bond are triggered when the owner declares the principal to be in default or terminates the principal’s contract for default. Read more »
Tags: contract termination
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As the US economic downturn began to take shape in 2008, many funds began scanning the landscape to position themselves to steal a distressed asset deal. Consequently, being financially positioned to take advantage of a down market, all the funds had to do was wait a little while for the banks to begin unloading distressed properties. Undoubtedly, lenders would need to clean house and divest themselves of bad debt now sitting on their books. However, the thirty-cents-on-the-dollar deals just didn’t materialize. What happened? Read more »
Tags: distressed assets
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April 1, 1979, the Federal Emergency Management Agency (FEMA) was established by Presidential Order to assist individuals and local and state authorities in dealing with disasters. The overarching role of FEMA is to coordinate the response to disasters and provide state and local governments with experts in specialized fields and funding for rebuilding efforts and relief funds for infrastructure, in conjunction with the Small Business Administration. FEMA’s assistance includes low interest loans or providing funds for the training of response personnel throughout the United States and its territories as part of the agency’s preparedness effort. Read more »
Tags: distressed assets, FEMA
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Robert S. Vance Federal Courthouse Building
Birmingham, AL
The General Services Administration (GSA) was tasked to administer the proposed ARRA-funded building projects. In August 2009, Hill International was selected as the Construction Manager as Agent (CMa) for the $42 million modernization and renovation effort of the Robert Smith Vance Federal Courthouse facility in Birmingham, Alabama.
The main challenge is to convert an historical 1920s-era building into a “high-performance green building” that is LEED-Certified and provides a model workplace, incorporating sustainable design while retaining the building’s historical character. Read more »
Tags: featured projects
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Interest in alternative sources of energy, such as solar and photovoltaic power, is on the rise.
Roger Bridges, President of Hill’s Canadian operations, became intensely interested in the earth’s fragile environment and finding ways to sustain it thirty years ago, when he was working at a job that some might consider incongruous to environmental protection.
“I used to work for an oil company,” Bridges said. “Oil companies, at one time, were targeted by environmental groups and did not have very good global reputations. Generally, they were regarded as the bad boys.” Read more »
Tags: renewable energy
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Even in the midst of the most severe economic downturn since The Great Depression, the Energy Information Administration (EIA) forecasts an increase in demand for electricity of 14% by 2035.
Tags: renewable energy
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Since February 17, 2009, the U.S. Department of Energy has authorized the expenditure of $16.7 billion under the American Recovery and Reinvestment Act of 2009 (ARRA) to help bolster the renewable energy industry. In addition to expanding important tax benefits under the Internal Revenue Code associated with investing in renewable energy projects, the ARRA created a robust cash grant system and empowered the DOE to guarantee up to $30 billion in loans. Although the scale of the stimulus presents many attractive investment opportunities, the complexity of its provisions requires that companies think strategically about how to take full advantage of the incentives offered. Read more »
Tags: renewable energy
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In today’s real estate climate, many commercial transactions involve property that is subject to foreclosure, loan default, bankruptcy, litigation, property value decline, tenant problems or has experienced other significant difficulties. When dealing with distressed property, parties must be aware of certain issues and possible pitfalls that may not arise in normal transactions. This article will discuss some basic considerations that parties should consider when purchasing distressed property or in connection with receivership and workout situations. Read more »
Tags: distressed assets, distressed property
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The sentiments going through each of our minds as we bid 2009 a “good riddance” and trek cautiously and more hopefully into 2010, emulate Franklin Roosevelt’s famous quote: “We have nothing to fear but fear itself.”
In response to the depressed state of the real estate and capital markets, large amounts of capital are now chasing opportunities to purchase defaulted hotels, as well as hotel real estate loans at a discount. Not since the savings and loan crisis in the late 1980’s has the market expected a comparable volume of distressed hotels to be sold. For savvy buyers, this is a chance to earn enviable returns.
“This is like deja vu all over again.” Yogi Berra
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Tags: distressed assets, distressed property, hospitality
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Construction lenders face myriad challenges in the plunging economy and real estate market. The difficulties include handling a heightened number of borrower defaults, deciding whether to continue disbursing construction loan funds in a declining market, and determining how to weigh the risks of foreclosing and completing construction on an incomplete project. While navigating these obstacles, lenders should always evaluate their potential liability to contractors and suppliers for bonded stop notices. Meanwhile, claimants should recognize the full extent of the stop notice remedy. While this article is predicated upon California law, to the extent the stop notice laws of other jurisdictions follow or mirror California law, the following discussion may be pertinent and is these issues should considered. Read more »
Tags: risk management
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The concept of Risk Management is well established, though not always well followed in management plans, especially on construction projects. The Project Management Institute’s a Guide to the Project Management Body of Knowledge defines Risk Management as the “systematic process of identifying, analyzing, and responding to project risk. It includes maximizing the probability and consequences of positive events and minimizing the probability and consequences of adverse events to project objectives.” Potential cash flow problems of owners, contractors, and subcontractors has always been one of the risks considered in these plans but in the current economy, the risk is far greater and the effects much more significant. These financial risks can strike from a number of directions as the owner, the lender, the designer, the general contractor, subcontractors, and even material suppliers can call and declare they are done, “sorry”. Read more »
Tags: distressed assets, distressed property, risk management
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The current economic climate has changed the landscape of government-funded construction projects. As both the demand for experienced contractors and design professionals and the availability of new construction projects have decreased, those in the industry must do what they can to set themselves apart in order to bring in work. Read more »
Tags: Federal False Claims Act
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As indicated in the attached article, the False Claims Act defines “knowingly” making a false claim as actual knowledge, deliberate ignorance, or reckless disregard. Though actual knowledge may be clear enough, the definitions of “deliberate ignorance” and “reckless disregard” must follow the U.S. Supreme Court’s threshold of “I’ll know it when I see it,” as there is no clear test. What for contractors may seem to be a reasonable effort to prepare a claim can be construed by the government as deliberate ignorance or reckless disregard. The Daewoo case is an illuminating example of how a contractor can prepare a claim it believes to be reasonable, only to find itself attacked by government experts asserting the “appearance of fraud”. Read more »
Tags: Federal False Claims Act, FFCA
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As an owner, you have just awarded a major infrastructure contract and the winning bid was 25 percent lower than your Engineer’s estimate. Finally, a benefit from this economy that will save your department money and possibly allow you to do more work. Or will it?
As a contractor, you have just been awarded a major contract. Sure the margins are low, but you can make it up on change orders, and this will allow you to keep your core staff employed and weather these tough economic times. Or will it?
These scenarios are being played out on construction projects all across the country as economic recovery money tries to tame the worst recession of our generation. Is it an oasis or merely a mirage? Read more »
Tags: Federal False Claims Act, FFCA
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